>From BUSINESS WEEK, April 13, 1998 HOW HIGH ARE FAMILY TAXES? A liberal-conservative debate rages As a current spat between the conservative Tax Foundation and the liberal Center on Budget & Policy Priorities illustrates, taxes are a red-hot topic in the nation's capital these days. Piqued by recent statements by leading Republicans that taxes rose last year to more than 38% of the typical U.S. family's income, the center attacked the source of the figure--a Tax Foundation report on median income families. In a 15-page analysis, the center criticizes the Tax Foundation's approach--particularly its stress on dual-earner families, which purportedly faced a total tax bite (all taxes at federal, state, and local levels) of 38.2% last year. Noting that the median income of such families came to $54,910 last year, more than the incomes of two-thirds of all families, the center argues that it's more appropriate to focus on median-income families of all types. According to the Congressional Budget Office, such families had an average income of $36,942 last year and faced a federal tax rate of about 19.7%, compared with the 26.1% the Tax Foundation says two-earner families paid. So focusing on median-income families regardless of type would reduce the total tax burden faced by ''typical'' families by several percentage points, the center observes. The center also quarrels with the treatment of corporate taxes. Rather than allocating such taxes to families based on their ownership of stock and other corporate assets, as the CBO does, the Tax Foundation assumes that all families pay the same percentage of income as do wealthy families who have huge corporate holdings. In its response, the Tax Foundation points out that it focuses on dual-earner families because that is the most common reporting type, and that it also includes single-earner families in its analysis. And it justifies its treatment of corporate taxes at federal and state levels by noting that some economists argue that corporate taxes are ultimately paid by workers through lower wages--so even workers who own no corporate stock are socked with corporate taxes. As the debate goes on, the center seems to have scored a modest victory. In its rebuttal, the Tax Foundation reduced its estimate of the tax rate faced by dual-earner families last year by 0.6%, to 37.6%--the same as in 1995. BY GENE KORETZ
